Singapore is expected to receive only 2.5 million-3 million mt of fuel oil cargoes from Europe and the US in July, down from around 4 million mt/month earlier in the year, according to estimates from traders.

The inflow of arbitraged cargoes in August will also remain low as the arbitrage window had been shut amid supply tightness at Rotterdam, traders added.

While some traders said they did not wish to bring in high sulfur fuel oil cargoes owing to current steep backwardation, others were increasingly looking to switch to low sulfur fuel oil storage.

“I guess [IMO] 2020 is also a game-changer…most of the VLCCs outside are now storing LSFO,” another bunker trader said.

Fuel oil traders in Singapore use VLCCs and other tankers to store fuel oil, while about 20 VLCCs were floating around Singapore as fuel oil storages, according to sources.
Source: Platts